Building Socialism in Cuba

Building Socialism in Cuba
As pressure for economic liberalization grows, what would it take to
turn Cuba into a socialist democracy?
by Samuel Farber

In July 2016, thanks to a 20 percent reduction in oil shipments from
Venezuela, Cuba’s economy minister Marino Murillo announced a 6 percent
cut in electricity and a 28 percent cut in fuel. Meanwhile, he ordered
an immediate drop in public sector energy use, with consequent
working-hour reductions for state employees, and warned of possible
blackouts, raising the specter of the dark and hungry days of the
Special Period of the nineties.

This turn of events delivered another blow to Raúl Castro’s attempts to
establish a Cuban version of the Sino-Vietnamese model, which maintains
a one-party state while opening the economy to private enterprise and
the market.

In the political realm, this has meant a relaxation of state control
over the citizenry. But this hasn’t been matched with democratization.
For example, the 2012 emigration reform facilitated Cuban citizens’
movement in and out of the country, but did not recognize travel abroad
as their right.

In the economic realm, the government has implemented a modest and
contradictory strategy. For example, the agricultural sector’s
structural reforms provide land leases for a maximum of twenty years;
the Chinese and Vietnamese governments, in contrast, established much
longer and, in some cases, permanent contracts.

The government now allows self-employment in few occupations (a little
over two hundred). Had it opened it up for the whole economy — reserving
only those sectors regarded as high social priorities, like medicine —
the reform would increase available products and services.

Complementary changes introduced to bolster these structural reforms —
like the establishment of wholesale markets and commercial bank credits
— have been inadequate and ended up negatively impacting the reform
program. In addition, the bureaucratic and inefficient Acopio — the
state agency with the monopoly power to buy most agricultural products
at prices established by the government — has slowed agricultural
production. As a result, harvested produce has spoiled while waiting to
be processed at government plants.

The Castro regime’s half measures will, more likely than not, push Cuba
closer to a form of state capitalism without democracy. But there is a
feasible alternative for the country.

No Recovery

Until this new crisis, the Cuban economy had partially bounced back
after the worst years of the Special Period, which devastated the
country in the wake of the collapse of the Soviet bloc in the late
eighties and early nineties.

The country hit bottom between 1992 and 1994, when extreme food
shortages led to an outbreak of an optical neuropathy epidemic that
affected some fifty thousand people. Since then, the Cuban economy has
surpassed the GDP it achieved in 1989.

But other indicators — such as real wages and pensions, which in 2014
were still at 27 percent and 50 percent of their 1989 level,
respectively — never came back. Meanwhile, social spending is still
falling, and family consumption is expected to decline 2.8 percent in
2016 and 7.5 percent in 2017.

Although the hunger of the early nineties is gone, Cubans still struggle
to find enough food. The much-praised development of organic and urban
agriculture on the island represents a relatively small part of
agricultural production. As Cuban economist C. Juan Triana Cordoví
pointed out, declining domestic production has forced hotels to import
vegetables, including yucca, the root-vegetable mainstay of the Cuban
diet. The small progress in sustainable agriculture doesn’t make up for
the fact that food production has never regained its 1989 level and that
more than half of Cuba’s food supply comes from imports, at an annual
cost of $2 billion.

Many of the revolution’s gains in education and health have also been
lost. The teachers who fled the educational sector’s low pay haven’t
been fully replaced, and private tutoring — often provided by public
school teachers in their spare time — has grown exponentially. In
addition, numerous school buildings, libraries, and laboratories are
crumbling. Before the start of the current school year, 350 schools were
closed after they were found to be in dangerous physical condition.

The same applies to many hospitals and other medical facilities, which
now operate with skeleton crews: the government sends large numbers of
general practitioners and specialists to Venezuela and other foreign
countries in exchange for oil or hard currency.

The regime’s contradictory reforms will likely pass with the historic
generation of leaders. Second-generation bureaucratic officials are
likely to fully commit to the Sino-Vietnamese model, perhaps tilting
somewhat toward Russia’s capitalism, which combines massive oligarchic
theft of state property with a nominal “democracy” that would give US
Congress the political cover it needs to repeal the 1996 Helms-Burton
law and remove the island’s economic blockade.

Besides winning the United States’s enthusiasm, this new generation of
leaders will enlist foreign capital and at least a sector of Cuban
American capital by reassuring them that the government will maintain
total control over the state, the mass media, and the mass organizations
— including state-controlled unions — to guarantee their new capitalist
investors, foreign and Cuban, peace, law, and order.

Yet there are other economic models that are being talked about inside
and outside the government, although in a rather discreet fashion due,
in great part, to the political system that does not allow a full and
candid exploration of ideas.

Free and Rational

Mainstream critics have for some time been arguing for the establishment
of a free-market economy, which they present as the only “rational”
alternative to the bureaucratic economic management of Communist Party rule.

This group covers a wide spectrum, ranging from a hard free-market
stance to a more social-democratic welfare state perspective. In this
latter grouping, moderate critics overlap with sections of the island’s
academic economists, including members of the Center for the Study of
the Cuban Economy at the University of Havana.

Yet hardly any of these critics have openly addressed the question of
what to do with the most important part of the Cuban economy, the larger
state-owned enterprises. Instead, they focus on establishing private
PYMEs — the Spanish language acronym for small and medium size
enterprises — although they haven’t clarified what “medium” actually means.

They have also supported the government’s move toward replacing the
universal rationing system with one that subsidizes categories of people
instead of products. Today, all Cubans, regardless of income, can
receive a number of products at low, subsidized prices. The new system
would only provide these products to the poorest and most disadvantaged,
thereby rationalizing agricultural markets and reducing the government’s
budget. The government’s recent reduction of the number of products
distributed by this system marks the first step in this means-tested
direction.

Finally, they imply that the state monopoly of foreign trade should end,
and Cubans should be free to import all they can afford from abroad.

Tito in Cuba

Like all of the regime’s opponents, the nascent critical left — mostly
composed of anarchist and social-democratic currents — has had to
operate under close state monitoring and repression. These left-wing
formations resist reductions to state benefits and — unprecedented in
the Cuban left’s history — call for a worker-managed economy.

Interestingly, they never mention democratic planning or coordination
among economic sectors. As a result, their version of worker
self-management would create an economy of self-sufficient firms in
competition with each other. This resembles the system implemented in
Tito’s Yugoslavia from the 1950s until the 1970s.

This market socialism was locally self-managed, but regionally and
nationally controlled by the League of Communists. It did increase
worker input, decision-making, and productivity at the local level but,
because of its competitive and unplanned nature, also created
unemployment, sharp trade cycles, pay inequality, and notable regional
disparities that favored the northern republics.

The workers’ powerlessness to decide on anything beyond what happened in
their workplaces encouraged parochialism, isolating them from broader,
national economic decisions. Workers felt no reason to support
investment in other enterprises, particularly those located far away.

In the last analysis, as Catherine Samary points out in Yugoslavia
Dismembered, Yugoslavian self-management could not confront either the
bureaucratic plan or the market. The 1970s was the last decade of
growth. Eventually a $20 billion debt led to the International Monetary
Fund’s intervention.

The Yugoslav model is a fraught one to emulate in Cuban, then. Further
making any kind of worker control unlikely, none of the government’s
left-wing opponents have explained how it might be implemented in the
absence of a workers’ movement or how it might operate if workers aren’t
motivated to fight for those goals.

There are other voices on the critical left that reject any concession
to private enterprise and capital on the grounds that capitalist
enterprise by definition contradicts socialism. But they have been
unable to answer the critical question of how a socialist and democratic
Cuba could emerge from poverty and economic stagnation without
concessions of any kind.

What is Possible

A growing number of Cubans on and off the island, see socialism —
whether democratic or authoritarian — as an impossibility. A diminishing
number of Cubans still regard it as either desirable or likely.
Certainly, the island’s current economic conditions — combined with
extraordinarily powerful international capital — make it hard to imagine
a fully fledged form of socialism.

This view derives from a specific application of the general Marxist
theory that rejects the possibility of socialism in one country,
particularly when that country is economically underdeveloped and exists
in a capitalist world currently unthreatened by socialist revolutions.

Besides having to face the hostility of its imperial northern neighbor,
autarkic “socialist” economic development won’t fit for Cuba because the
country still depends on oil imports. Further, its reliance on tourism
and medical service, nickel and, to a lesser degree, pharmaceutical
product exports and the dramatically shrunken sugar industry underline
the foreign-trade character of Cuba’s economy. The island’s considerable
integration into the capitalist world market prevents the establishment
of a full socialist democracy.

This does not mean, however, that Cuba should abandon socialism.
Instead, critics must think in terms of a transitional economy, a
holding operation that can realistically be implemented until an
international situation more favorable to socialism develops.

Classical Marxist political economy provides a model for what that
possible holding pattern could be. This theory recognizes the greater
role that individual, family, and small-scale production and
distribution play in less-developed economies like Cuba.

In Socialism: Utopian and Scientific, Friedrich Engels distinguishes
between modern capitalism — where production is a social act, but the
social product is appropriated and controlled by individual capitalists
— and socialism — where both production and its appropriation are
socialized. Following this distinction, the productive property
requiring collective work becomes the proper object of socialization,
leaving aside individual and family production as well as personal property.

A transitional economy in Cuba would therefore allow for small,
productive private property. This accommodation derives from a
fundamental Marxist analysis of capitalism, not an opportunistic
adaptation to liberal, free-market politics.

In Cuba, as in many other less developed countries, a transitional
economy would subordinate a private sector of small enterprises ruled by
market mechanisms under a commanding state sector that administers the
island’s big industry — pharmaceuticals, tourism, minerals, and banks
— through workers’ control and democratically coordinated and planned in
a democratic polity. The government would strive, through its knowledge
of market conditions and adequate economic forecasts, towards
harmonizing the state and self-employed economy according to a definite
plan.

Economic Obstacles

But we must first honestly assess the Cuban economy, which, even before
a reduction in Venezuelan oil shipments provoked the current crisis, had
been in a marked state of deterioration.

For one thing, its all-encompassing public sector is floundering. As the
Cuban economist Pedro Monreal reminded us, the government has openly
admitted that 58 percent of state enterprises function “deficiently or
badly.”

Also, the island’s economic growth has been generally low, a situation
that will only be aggravated by the current crisis. Cuban economist
Pavel Vidal Alejandro estimates that Cuba’s GDP will not grow in 2016
and will likely shrink by almost 3 percent in 2017. This would mark the
first year of negative growth in the last quarter century.

Important voices in the left opposition have argued against economic
growth for ecological and other reasons. But improving most Cubans’
material conditions is a condition of a successful democratization. The
alternative — continual stagnation and declining living standards — will
encourage massive emigration. This represents a tragedy in itself, but
would also undermine potential democratic and progressive — let alone
socialist — opposition movements.

Alarmingly, the rate of new investment, necessary to replenish the
existent capital stock, has become among the lowest in Latin America,
dropping below 12 percent of GDP. Government forecasts indicate that
investments will fall 17 percent in 2016 and 20 percent in 2017. This
will result in a rate of gross capital formation slightly over
10 percent, barely half the rate of investment considered necessary for
economic development

The deterioration of Cuba’s capital stock makes it impossible to
maintain the current economic output and living standards, much less to
expand them. As a result, the substantial increase in tourism — from
3 million visitors in 2014 to 3.5 million in 2015, and a projected
3.7 million by the end of 2016, sparked by the resumption of US-Cuba
relations in December 2014 — has strained Cuba’s tourist capacity to its
limit.

Further, President Obama’s elimination of restrictions on the
remittances sent to the island by Cuban Americans has significantly
worsened food and beverage shortages. Supply cannot meet the increase in
demand.

The Cuban economy’s productivity also lags. Agricultural yields — with
the exception of potatoes — are well below the rest of Latin America. In
industry, biotechnology is the only sector that enjoys high productivity
relative to the region.

Rising productivity isn’t just a profit-driven capitalist scheme. An
economy that prioritizes reducing backbreaking labor, improving living
standards, and maximizing leisure time can only do so if it also
prioritizes making more with the existing workforce.

Che Guevara advocated what in effect was the “sweating of labor.” But
better organization, technology, and — most importantly — worker control
would have the same effect.

Control, in itself, represents a powerful motivator. The current low
productivity comes from a bureaucratic system that systematically
creates disorganization and chaos and does not provide workers either
with political incentives — allowing them to have a say and control over
what they do — or with material incentives — typical of the developed
capitalist world — to motivate them. Guevara’s moral incentives failed:
they were a method to get workers to take responsibility without power
and to work harder without control or pay.

Ecological Obstacles

Much of the island’s left opposition to economic growth is grounded in
environmental considerations. Cuba now confronts many serious ecological
problems, including the increasing number of breakages and leaks in the
old and poorly serviced water pipes all over the island. This has led to
a massive loss of water, which often spills into streets and empty lots,
and to the frequently inappropriate storage that many residents have
been forced to resort to in response to the lack of water. Consequently,
the Aedes Aegypti mosquito, which transmits the dreaded Dengue illness,
has proliferated.

Moreover, the growing number of pigs, poultry, and house-grown crops
— part of the much-vaunted, but very problematic, urban agriculture
movement — has combined with deteriorating garbage collection services
to considerably increase the risk of urban health crises.

The recent government claims to have held off the Zika epidemic and
almost eliminated the Dengue fever must be met with skepticism as long
as these and other conditions that propitiate the spread of diseases remain.

Anti-growth sentiment among Cuban left-wing oppositionists was
reinforced when, on a recent visit to Havana, the economist Jeffrey
Sachs recommended that “the Cuban people don’t progress into the
twentieth century.” As the left-wing journalist Fernando Ravsberg
explained, Sachs argued that Cubans should not forget sustainability and
concentrate on the development of organic agriculture, sowed without
tractors and grown without using chemical fertilizers or pesticides.

If Ravsberg’s account is correct, Sachs’s argument fails to weigh the
relative costs and benefits of environmentally conscious measures. Small
and economical tractors, like those the Cuban government is planning to
produce in association with US capital, do still consume oil. But oil’s
negative environmental effects do not compare to the cost of human- and
animal-powered agriculture. The latter model produces less food while
requiring massive energy inputs from workers and animals.

Cuba’s history already proves this: the forced abandonment of motorized
agricultural vehicles at the beginning of the Special Period
constituted, in net terms, a huge setback for the Cuban people.

Also in the nineties, urban transport was demotorized, and many city
residents turned to bicycles. They were later abandoned — not because
Cubans abstractly preferred the infrequent and overcrowded buses or the
expensive urban collective taxis (only a small proportion of Cubans own
automobiles), but because bicycles don’t let workers arrive on time from
distant working-class suburbs nor do they protect riders from tropical
rains and winds from June until November.

The Chinese government has encouraged individual car ownership, which
has contributed to the country’s overwhelming urban pollution. This
should serve as a warning sign for Cuba to aim for the adoption of an
effective mass transit system as an alternative environmental policy.

Finally, at a minimum, Cuba needs to improve on the 5 percent of its
electricity derived from renewable sources, which is a quarter of the
Latin American average.

The Politics of a Socialist Alternative

The move toward a socialist society does not only require a program, but
also a politics. This requires using principled strategic and tactical
considerations to engage with the government’s and various oppositionist
currents’ proposals.

In doing so, Cuban socialists might find areas of overlap with the
liberal Catholic and social-democratic critics. Those include proposals
that would promote agricultural production and productivity, such as
codifying individual farmers’ usufruct rights, eliminating the
compulsory sale of agricultural produce to the government at prices
dictated by the Acopio, and creating wholesale markets for small firms
and individual producers.

In the field of urban employment, these proposals include forming
cooperatives based on the initiative of interested workers, rather than
on government diktats trying to dispose of so-called lemons
— unprofitable enterprises or businesses that are difficult to
administer on a centralized basis, like small restaurants.

At the same time, this new left will need to counter other proposals
from those same groups. For example, they call for legalization of all
forms of self-employment, including occupations that should be run on
behalf of the public interest, like education and medicine.

The Left can respond to the call for free importation by arguing that a
democratically run state should allocate foreign exchange on a strict
priority basis, with social criteria that favor the most economically
deprived sectors of the population and the purchase of capital goods
that would most support the country’s economic development. Otherwise,
affluent Cubans might waste the country’s relatively scarce foreign
exchange on frivolous imports, such as expensive vehicles or luxurious
furniture and household effects.

Socialists should also resist the dominant view — held by both critics
and an increasing number of government economists — that the government
should subsidize people, not products, that it should replace its
universal subsidies with a system that provides for only the neediest
citizens.

To be sure, those universal subsidies unnecessarily benefit wealthier
Cubans. However, the critics of this program never mention their
proposal’s downside, which is that it undermines social solidarity.
International experience has shown that income-tested programs for the
poor produce stigmatization and, as a result, lose political legitimacy
over time, thus threatening their long-term funding and viability.

One answer to this problem would be the introduction of a sliding scale
where everybody benefits in inverse proportion to their income. This
would recognize differential need while maintaining maximum political
support.

Socialists in the Marxist tradition understand that subsidies must
be selective: if, under current conditions, everything was provided free
of charge or sold below production costs, an economy would collapse in
short order. Moreover, a relatively underdeveloped economy like Cuba’s
has a much smaller surplus to leverage for free and subsidized goods.

But keeping the idea of universal subsidies alive leaves the road open
for their future expansion as the Cuban economy becomes more productive
and wealthier.

Liberal critics and the government itself support foreign investment as
a means to deal with the Cuban economy’s undercapitalization. Many on
the Left have opposed it, seeing it as the Trojan horse of capitalism
and foreign domination. However, a policy of controlled and selective
foreign capitalist investment is indispensable in the absence of a
domestic developed-goods industry. These imports could bring in new
machinery and renew transportation and utility infrastructure.

New investments from abroad can also have significant employment and
multiplier effects that trigger the development of entirely new
industries that complement and further develop the established ones.

Further, the impact of foreign investment on wages and working
conditions could be negotiated by independent unions, which, among other
things, should prioritize the immediate abolition of the Cuban
government’s practice of collecting salaries owed to Cuban workers from
foreign investors and then turning over to their citizens only a small
fraction of the money collected. The government claims that they do this
to finance social spending and other government operations. But the same
goal could be achieved through a transparent and equitable tax system
rather than through the government monopoly of the sale and control of
labor.

It is true that worker-controlled production and powerful unions may
deter foreign investment. However, an honest public administration and
tax system as well as the existence of natural and human resources not
reproducible elsewhere can also serve as a draw that supersedes those
disadvantages.

Right-wing critics and oppositionists play down — if not ignore entirely
— the crucially important issue of Cuba’s growing inequality. For the
Left this presents a unique opportunity to push for independent unions,
which, along with a progressive tax system, could be a more effective
policy than the current one, in which the proliferation of bureaucratic
rules harasses small firms and the self-employed.

This is not to do away with regulation entirely; it is necessary in
occupational safety, health, pensions, and union rights. If these rules
were administered — under worker control and supervision — by
professional organizations rather than by a central bureaucracy, they
would surely benefit workers, not owners. But to do so will require
distinguishing between rules designed to protect the interests of the
workers and those that protect the interests of bureaucrats.

Engaging with the specific proposals put forward by both the
undemocratic government and by the pro-capitalist opposition sector, the
Left will have the opportunity to formulate specific demands and to
mobilize people to fight for them. This would build a movement — or at
least a clear organizational pole — in spite of government repression
and popular skepticism.

Cuba’s present regime will not permit the existence of other legal
political parties, independent unions, or a free mass media. Of course,
these elements constitute precisely the political setting that would
facilitate the kind of transitional social and political system outlined
here.

Nevertheless, the left opposition must talk about an alternative model
that openly acknowledges both the possibilities and the difficulties
involved in building a socialist democracy. This empowers people, rather
than making them feel that nothing can be done to push the country in an
anticapitalist, radically democratic, and socialist direction. But there
is an alternative.

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